If You Need Love, Get A Puppy Essay

1. PCAOB describes professional skepticism as a general duty of c ar that needs to be applied by the listener passim the duration of the audit engagement. Professional skepticism involves the auditor having a clear and questioning mind regarding the commands that are presented by management or other client personnel. The auditor is instructed to non take the words or data presented by management as sufficient and appropriate audit testify but preferably the auditor needs to thoroughly audit the distinguish with a questioning mind to achieve reasonable assurance about the persuasiveness of the evidence. Skepticism is be of three elements auditor attributes, mindset and actions. The PCAOB instructs the auditor to always question evidence presented by the auditor for the probability of loss, fraud or financial misstatement. give, the auditor, exercised professional skepticism in this fact when it came to the mysterious cash shred fees for the tickets on 11/16. Having been colleagues with Jessica, lead needed to exhibit a higher level of skepticism. When Jessica produced the deposit shoe for the $320 ticket and asserted that the deposit slip had probably fallen in between two cabinets in the vault, go away had the opportunity of taking Jessicas assertion as sufficient and appropriate evidence but rather decided to investigate further and noticed that the year on the bills was different than the year of the ticket and that the ink on the deposit slip was different. Will wherefore widened the sample size to see if this was a singularity or evidence of an ongoing comeback/fraud.The two main conditions that could cod affected his skepticism were his relationship with the process owner he was auditing and the materiality levels set forth for the audit. Jessica Randle, the wife of Wills best friend, was the process owner for the area Will was currently auditing. This presents an issue in that skepticism can sometimes be influenced by the relationshi ps auditors drive do with the people they are auditing. An auditor is more believably to believe the assertions made by some maven they know and trust, and this directly hinders on their skepticism. Will office toohave decided to not pursue further with his investigation of cash deposits that are missing their deposit slip due to the amounts ($320), being below the materiality threshold of $5,000.This, coupled with the fact that he felt as if he was irritating his superiors by asking many questions might have caused Will to only abandon further investigating the area. If Will had not been exercising professional skepticism, he would simply have taken Jessicas assertion as to wherefore the deposit slip was missing as sufficient and appropriate evidence and moved on with another audit area. Jessica would have never gotten caught, and the fraud might have continued.2. The Generally Accepted Auditing Standards require that the auditor must maintain license in mental attitude in all matters relating to the audit. There are two types of inde writedence that are required of auditors. Independence in appearance relates to others perceptions of auditors independence. It is of the utmost importance that users of the financial statements believe that the auditor is independent. For instance, if an auditor were to own even off one share in a company that he or she was auditing, third party users would likely see that auditor as lacking independence even if the auditor was truly unbiased and considered that share irrelevant.The Code of Professional Conduct oral communicationes the issue of personal client relationships. The familiarity threat states that auditors having a close or long standing relationship with an attest client or knowing individuals or entities (including by re puzzleation) who per cultivateed nonattest services for the client lack independence. Part e. of this section states that a member of the attest engagement team whose close friend is in a key position is unallowed. Wills independence in this case was questionable.His best friends wife, Jessica, departed for the client, but she did not hold a key position. Wills independence in fact may be perceived differently by different users. However, Wills independence in mind seemed to be impaired in this case. He was clearly ill-fitting accusing his best friends wife of fraud. Some cases may exist where auditors in similar situations were so un flourishing that they looked the other way.The factor that plays the great role in determining auditor independenceis independence in mind. Auditors may or may not appear to be independent, but if the auditor is truly independent in mind, then the auditor can remain objective and unbiased. The profession should consider tightening the Code of Professional Conduct to address the issue of an audit team member knowing a close friend that holds any position at the audit client. If this scenario arises, the firm can allay audit the cli ent, but the audit member with the close relationship wont be able to be on the audit team.3. The evidence in the case is presented in a manner that leads to a stronger refute to Jessicas claim that the silver had fallen between the cabinets as opposed to supporting her claim. The evidence that would lead to support her claim would be her statement that there could be several explanations as to why the ticket was missing. She originally suggested that the ticket most likely was included with the other cash. After finding the ticket, Jessica states a story of what must have happened was that the assistant clerks were working late one night and must have decided to include the deposit with the following days bank deposit. Thus, when the ticket was missing, no one noticed. All of these explanations mentioned are all responses to inquiries of client.This type of evidence is not conclusive and could be biased in the clients favor hence, why this is the only evidence that is in favor of Jessicas statement. When Will went back to his desk and counted the money he made sure the money on the slip was all there, $320, which is way under the set amount of $5,000 for materiality on the job. However, he noticed that the bills were crisp and has been printed in 2006. He checked this back to the bank deposit slip where he reconfirmed that the deposit was dated November 16, 2005. He then traced it back to the cash reception to find that it was indeed recorded on November 16, 2005.This document tracing is important evidence that clearly shows a discrepancy in the documentation which lead to the first real line of evidence towards fraud. Another discrepancy that caught Wills eye was the entry in the in receipt book was recorded in black ink while the writing on the envelope was in blue ink. Although this is not a strong form of evidence, it is enough to bring into question the evidence that has been traced back to recorded items.4. Effective controls that if installed would have prevented or detected this theft include Segregation of Duties (SoDs) and Daily payment and bank deposit reconciliations. The first area of controls deals with the Receipt books and proper SoDs. The telephone receiver of cash payments should be different from the individual that records that cash payments into the Sheriffs computer records as paid. The other control deals with reconciliations. The morning afterwards the daily payment vouchers are processed and deposited, a reconciliation by someone who was not a recipient of cash payments the precedent day needs to be done to reconcile that the total amount deposited into the bank matches the bank statement of amounts deposited by check, cash and money order. A monthly reconciliation needs to be performed for all payments done by credit card.5. After Will presented Vince with the evidence that he has found after Jessica showed him the missing deposit slip along with the cash, the two decided to test eight more cash paid ticke ts. When five of the eight tickets were also not included in the bank deposit of the day, Will and Vince decided to have a meeting to discuss how they were going to proceed. With the evidence leading to fraudulent activity, the auditors could have decided to proceed in one of two ways. The first being to assess the level of materiality and decide if the amounts were immaterial, and if so they could leave the report as is. The other route the auditors could take is to further examine revenue, specifically the tickets paid in cash. If the decision is to proceed even further with the audit, there are dual steps the auditors would take to reach reasonable assurance.First, they could examine internal controls to see if there was any other person who could have been using Jessicas lift as a cover up, for she was not the only assistant Clerk of Court. Next, they could examine every cash transaction for 2006, and if the trend continues, examine through previous years. Along with further t esting of the transactions, the auditors would be conscious of the level of materiality. The auditors could even go to the extent of checking the bank statements to verify that the cash tickets arent being put with other cash deposits in the department. Ultimately, the auditors would have to contact the sheriff and police department to reporttheir findings.In this case, the auditors may have decided to6. In pursuing the matter, Will faced a number of pressures. At first he was concerned because Jessica was his best friends wife and he did not feel comfortable working in the situation. But Vince Huston, the partner that he had usually worked with assured him that knowing Jessica may not be such a bad thing. When Will was completing the audit and found that a cash receipt had not been deposited, he did not want to believe that Jessica was responsible so he double-checked his work and then he asked her about it. After receiving the bank deposit from Jessica, he was still skeptical beca use he had noticed a few minor things. The pen ink was two different colors in the receipt book and on the envelope. And then he noticed that it is impossible for a 2005 cash receipt to be paid for with a bill marked 2006.Will asked Jessica about the matter but she brushed it off and he was forced to report what he found out to Vince. In dealing with the misappropriation of assets of fraudulent financial coverage, auditors are to maintain professional skepticism throughout the engagement. This is because fraud is often committed by a person that the auditor least expects. In this case, it was Jessica. Will maintained his professional skepticism and did not let the fact that Jessica is his best friends wife affect his work. Auditors, in general, must also be aware of the basics of fraud awareness. Auditors should be able to notice any signs or signals of fraud and then be able to trace the documents back to anything that may help to uncover fraudulent activity.7. When most people m ake ethical decisions, one of the things they do is try to find alternatives to the problem or situation and ask themselves what the consequences of those alternatives would be. In Wills situation, after finding out that Jess was involved in misappropriating the cash associated with the ticket he had the options of letting what he had found out slide because Jess was his best friends wife, or confronting her about the situation and reporting her or letting her report herself.Ignoring the obvious signs that Jess was stealing money would only lead to her continuing to steal more money. The auditor would be putting their calling in jeopardy and it would be highly unethical of any auditor to act in this way because they have a responsibility to maintain professional skepticism throughout the audit process. The other alternatives of reporting Jessica or letting her report herself to the authorities would be the right and ethical alternative to the situation. The consequences would be reasonably much the same as they had turned out. Consequences for reporting Jess would be what they turned out to be. She would get punished for her crimes and on a more personal level, reporting her would lead to Will losing his best friend.